Economics Gdp Questions
The difference between GDP and GNP deflator GDP deflator inflation lies in the measures they use to calculate inflation.
GDP deflator is a measure of inflation that compares the current prices of all goods and services produced within a country's borders to the prices of the same goods and services in a base year. It reflects changes in the overall price level of the goods and services produced domestically.
GNP deflator, on the other hand, measures inflation by comparing the current prices of all goods and services produced by a country's residents, regardless of where they are located, to the prices of the same goods and services in a base year. It reflects changes in the overall price level of the goods and services produced by a country's residents, whether they are produced domestically or abroad.
In summary, GDP deflator measures inflation based on the prices of goods and services produced within a country's borders, while GNP deflator measures inflation based on the prices of goods and services produced by a country's residents, regardless of location.